Fannie Mae 2006 Annual Report Download - page 289

shares have been issued; issuance of shares to certain officers designated by OFHEO is subject to approval of
OFHEO.
Restricted Stock Program
Under the 1993 and 2003 Plans, employees may be awarded grants as restricted stock awards (“RSA”) and,
under the 2003 Plan, also as restricted stock units (“RSU”), depending on years of service and age at the time
of grant. Each RSU represents the right to receive a share of common stock at the time of vesting. As a result,
RSUs are generally similar to restricted stock, except that RSUs do not confer voting rights on their holders.
By contrast, the RSAs do have voting rights. Vesting of the grants is based on continued employment. In
general, grants vest in equal annual installments over three or four years beginning on the first anniversary of
the date of grant. Based on the share’s fair value at grant date for each grant, the fair value of restricted stock
vested in 2006 was $68 million. The compensation expense related to restricted stock is based on the grant
date fair value of our common stock.
The following table displays restricted stock activity for the years ended December 31, 2006, 2005 and 2004.
Number of
Shares
(1)
Weighted Average
Fair Value at
Grant Date
Number of
Shares
(1)
Weighted Average
Fair Value at
Grant Date
Number of
Shares
(1)
Weighted Average
Fair Value at
Grant Date
2006 2005 2004
For the Year Ended December 31,
Nonvested as of January 1 . . . . . 3,025 $66.35 1,523 $75.32 806 $70.98
Granted
(2)
. . . . . . . . . . . . . . . 1,694 53.57 2,240 61.89 1,037 77.50
Vested . . . . . . . . . . . . . . . . . (1,030) 65.81 (453) 73.65 (245) 70.83
Forfeited. . . . . . . . . . . . . . . . (290) 66.36 (285) 67.47 (75) 73.44
Nonvested as of December 31 . . 3,399 $60.15 3,025 $66.35 1,523 $75.32
(1)
Shares in thousands.
(2)
For the years ended December 31, 2006, 2005 and 2004, total number of shares include 15 shares, 291 shares and
668 shares, respectively, under the 1993 plan.
We recorded compensation expense for these restricted stock grants of $82 million, $61 million and
$32 million for the years ended December 31, 2006, 2005 and 2004, respectively. As of December 31, 2006,
unrecognized compensation cost related to unvested restricted stock was $122 million and is expected to be
realized over a weighted-average term of 2.3 years.
Stock Appreciation Rights
Under the 2003 Plan, we are permitted to grant to employees Stock Appreciation Rights (“SARs”), an award
of common stock or an amount of cash, or a combination of shares of common stock and cash, the aggregate
amount or value of which is determined by reference to a change in the fair value of the common stock. No
SARs were granted during 2006, 2005 and 2004.
Shares Available for Future Issuance
The 1985 Purchase Plan and the 2003 Plan allow us to issue up to 90 million shares of common stock to
eligible employees for all programs. As of December 31, 2006, 11,960,258 and 32,419,994 shares remained
available for grant under the 1985 Purchase Plan and the 2003 Plan, respectively.
F-58
FANNIE MAE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)